Recreational pot sales: Where the grass is much greener

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Photos:Photos: Retail pot shops open in Colorado

Retail pot shops open in Colorado – Customers wait in a long line for their turn to buy recreational marijuana outside the LoDo Wellness Center on Wednesday, January 1, in Denver. Colorado is the first state in the nation to allow retail pot shops.

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Photos:Photos: Retail pot shops open in Colorado

Retail pot shops open in Colorado – Donald Andrews, whose family owns and runs the LoDo Wellness Center, hands out tickets marking customers' place in the line.

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Photos:Photos: Retail pot shops open in Colorado

Retail pot shops open in Colorado – Hailey Andrews, who manages the LoDo Wellness Center, fills an order for a customer. Colorado residents can now buy marijuana like alcohol, but purchases are limited to an ounce at a time.

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Photos:Photos: Retail pot shops open in Colorado

Retail pot shops open in Colorado – Andrews examines marijuana plants in the grow room of the LoDo Wellness Center. Pot is the third most popular recreational drug in America, after alcohol and tobacco, according to the National Organization for the Reform of Marijuana Laws.

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Photos:Photos: Retail pot shops open in Colorado

Retail pot shops open in Colorado – Marijuana plants thrive in the grow room of the LoDo Wellness Center.

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Photos:Photos: Retail pot shops open in Colorado

Retail pot shops open in Colorado – Marijuana dries next to a harvest calendar in the grow room of the LoDo Wellness Center.

Retail pot shops open in Colorado – People line up to buy recreational marijuana outside of Evergreen Apothecary.

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Photos:Photos: Retail pot shops open in Colorado

Retail pot shops open in Colorado – Customers wait to be served in the LoDo Wellness Center.

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Photos:Photos: Retail pot shops open in Colorado

Retail pot shops open in Colorado – Pamphlets about the legal recreational use of marijuana sit on a desk at the LoDo Wellness Center.

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Photos:Photos: Retail pot shops open in Colorado

Retail pot shops open in Colorado – People line up to buy recreational marijuana at the LoDo Wellness Center.

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Photos:Photos: Retail pot shops open in Colorado

Retail pot shops open in Colorado – Marijuana plants sit under grow lights at the 3D Cannabis Center in Denver.

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Photos:Photos: Retail pot shops open in Colorado

Retail pot shops open in Colorado – Sean Azzariti, an Iraq war veteran and marijuana activist, speaks to the media after becoming the first person to legally purchase recreational marijuana in Colorado. "It's huge," he said. "It hasn't even sunk in how big this is yet."

Retail pot shops open in Colorado – Marijuana paraphernalia sits on display at the LoDo Wellness Center. Communities and counties in Colorado can still choose not to allow marijuana stores in their local jurisdictions.

Retail pot shops open in Colorado – Marijuana prices are on display at the 3D Cannabis Center. Tax revenue from retail pot sales will initially amount to $67 million a year, with $27.5 million of it designated to build schools, state officials say.

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Photos:Photos: Retail pot shops open in Colorado

Retail pot shops open in Colorado – Darren Austin, left, and his son Tyler line up outside the 3D Cannabis Center.

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Story highlights

The Andrews family runs a mom and pop pot shop in Denver

First day of recreational pot sales equaled a month's sales of medical marijuana

Colorado's recreational pot stores saw about $1 million in sales on first day

In a far corner of downtown Denver, the Andrews family runs an old-fashioned mom and pop (and daughter) shop, selling the biggest novelty of a new era: marijuana.

Their cozy store is fraught with risk. Although Colorado's landmark law makes it legal to sell marijuana to those 21 or older, the feds still classify it as illegal. The Obama administration says it won't prosecute buyers and sellers under the state's law, which went into effect January 1.

Nonetheless, banks won't service recreational pot stores out of fear of being prosecuted for money laundering. So, the Andrews' shop operates as an all-cash business.

For all the talk about how weed is recreational, the reality is it's financial. In fact, the expected boon is Colorado's "green rush" -- new taxes for government and untold millions to be made by growers and merchants. And if opening week is any indication, there's clearly gold in them thar buds.

Public perceptions about pot have come a long way, from the dire warnings of "Reefer Madness" to growing acceptance of medical marijuana and the legalization of recreational use.

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Photos:History of marijuana in America

Harry Anslinger was named commissioner of the Federal Bureau of Narcotics when it was established in 1930. While arguing for marijuana prohibition, he played on Americans' fear of crime and foreigners. He spun tales of people driven to insanity or murder after ingesting the drug and spoke of the 2 to 3 tons of grass being produced in Mexico. "This, the Mexicans make into cigarettes, which they sell at two for 25 cents, mostly to white high school students," Anslinger told Congress.

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Photos:History of marijuana in America

A poster advertises the 1936 scare film "Reefer Madness," which described marijuana as a "violent narcotic" that first renders "sudden, violent, uncontrollable laughter" on its users before "dangerous hallucinations" and then "acts of shocking violence ... ending often in incurable insanity."

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Photos:History of marijuana in America

Marijuana cigarettes are hidden in a book circa 1940. Congress passed the Marijuana Tax Act in 1937, effectively criminalizing the drug.

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Photos:History of marijuana in America

Even after Congress cracked down on marijuana in 1937, farmers were encouraged to grow the crop for rope, sails and parachutes during World War II. The "Hemp for Victory" film was released in 1942 by the U.S. Department of Agriculture.

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Photos:History of marijuana in America

A woman buys ready-rolled marijuana cigarettes from a dealer at her door circa 1955.

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Photos:History of marijuana in America

Members of the Grateful Dead talk with reporters from their home in San Francisco on October 5, 1967. The band was protesting being arrested for marijuana possession.

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Photos:History of marijuana in America

U.S. Customs agents track the nationwide marijuana market during Operation Intercept, an anti-drug measure announced by President Nixon in 1969. The initiative intended to keep Mexican marijuana from entering the United States.

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Photos:History of marijuana in America

Research scientist Dr. Reese T. Jones, right, adjusts the electrodes monitoring a volunteer's brain response to sound during an experiment in 1969 that used a controlled dosage of marijuana. The tests were conducted at the Langley Porter Institute at the University of California, San Francisco.

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Photos:History of marijuana in America

Marijuana use became more widespread in the 1960s, reflecting the rising counterculture movement.

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Photos:History of marijuana in America

People share a joint during a 1969 concert in Portland, Oregon. In 1973, Oregon became the first state to decriminalize cannabis.

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Photos:History of marijuana in America

Police dogs trained to smell out hidden marijuana examine U.S. soldiers' luggage at the airport during the Vietnam War in 1969. Drug use was widespread during the war.

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Photos:History of marijuana in America

Marijuana reform was the Life magazine cover story in October 1969. The banner read: "At least 12 million Americans have now tried it. Are penalties too severe? Should it be legalized?"

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Photos:History of marijuana in America

Protesters wade in the Reflecting Pool at the National Mall in Washington during the "Honor America Day Smoke-In" thrown by marijuana activists in response to the official "Honor America Day" rally organized by President Nixon supporters at the Lincoln Memorial on July 4, 1970.

President Jimmy Carter, with his special assistant for health issues, Dr. Peter Bourne, beside him, talks to reporters at the White House about his drug abuse control message to Congress on August 2, 1977. Among other things, he called for the elimination of all federal criminal penalties for the possession of up to one ounce of marijuana.

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Photos:History of marijuana in America

First lady Nancy Reagan participates in a drug education class at Island Park Elementary School on Mercer Island, Washington, on February 14, 1984. She later recalled, "A little girl raised her hand and said, 'Mrs. Reagan, what do you do if somebody offers you drugs?' And I said, 'Well, you just say no.' And there it was born." She became known for her involvement in the "Just Say No" campaign.

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Photos:History of marijuana in America

Robert Randall smokes marijuana that was prescribed to treat his glaucoma in 1988. He became the first legal medical marijuana patient in modern America after winning a landmark case in 1976.

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Photos:History of marijuana in America

President George H. Bush holds up a copy of the National Drug Control Strategy during a meeting in the Oval Office on September 5, 1989. In a televised address to the nation, Bush asked Americans to join the war on drugs.

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Photos:History of marijuana in America

A television ad aired in 1996 by Republican presidential candidate Bob Dole's campaign included footage from a 1992 MTV interview of a laughing President Clinton saying he would inhale marijuana if given the chance to relive his college days.

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Photos:History of marijuana in America

Dennis Peron takes notes during a phone interview while Gary Johnson lights up at the Proposition 215 headquarters in San Francisco on October 11, 1996. The ballot measure was approved when voters went to the polls in November, allowing medical marijuana in California.

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Photos:History of marijuana in America

People in New York gather for a pro-cannabis rally on May 4, 2002. That same day, almost 200 similar events took place around the world to advocate for marijuana legalization. It was dubbed the "Million Marijuana March."

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Photos:History of marijuana in America

Different varieties of medical marijuana are seen at the Alternative Herbal Health Services cannabis dispensary in San Francisco on April 24, 2006. The Food and Drug Administration issued a controversial statement a week earlier rejecting the use of medical marijuana, declaring that there is no scientific evidence supporting use of the drug for medical treatment.

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Photos:History of marijuana in America

Medicinal marijuana patient Angel Raich wipes her eyes during a press conference on March 14, 2007, in Oakland, California. The 9th circuit U.S. Court of Appeals in San Francisco ruled that 41-year-old Raich, who used medicinal marijuana to curb pain from a brain tumor as well as other ailments, did not have the legal right to claim medical necessity to avoid the possibility of prosecution under federal drug laws.

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Photos:History of marijuana in America

Coffeeshop Blue Sky worker Jon Sarro, left, shows a customer different strains of medical marijuana on July 22, 2009, in Oakland, California. Voters in the city approved a measure during a vote-by-mail special election for a new tax on sales of medicinal marijuana at cannabis dispensaries.

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Photos:History of marijuana in America

A patient prepares to smoke at home in Portland, Maine, on October 22, 2009, a decade after the state approved a medical marijuana referendum.

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Photos:History of marijuana in America

Sonja Gibbins walks through her growing warehouse in Fort Collins, Colorado, on April 19, 2010. Since the state approved medical marijuana in 2000, Colorado has seen a boom in marijuana dispensaries, trade shows and related businesses. So far 20 states and the District of Columbia have made smoking marijuana for medical purposes legal.

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Photos:History of marijuana in America

Marijuana activist Steve DeAngelo wears a "Yes on Prop 19" button as he speaks during a news conference in Oakland, California, on October 12, 2010, to bring attention to the state measure to legalize marijuana for recreational purposes in California. Voters rejected the proposal.

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Photos:History of marijuana in America

Nutrient products are placed on shelves in the weGrow marijuana cultivation supply store during its grand opening on March 30, 2012, in Washington, D.C. The store is a one-stop-shop for supplies and training to grow plants indoors, except for the actual marijuana plants or seeds. Legislation was enacted in 2010 authorizing the establishment of regulated medical marijuana dispensaries in the nation's capital.

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Photos:History of marijuana in America

People light up near the Space Needle in Seattle after the law legalizing the recreational use of marijuana went into effect in Washington on December 6, 2012.

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Photos:History of marijuana in America

A man smokes a joint during the official opening night of Club 64, a marijuana social club in Denver, on New Year's Eve 2012. Voters in Colorado and Washington state passed referendums to legalize recreational marijuana on November 6, 2012.

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Photos:History of marijuana in America

Members of a crowd numbering tens of thousands smoke and listen to live music at the Denver 420 Rally on April 20, 2013. Annual festivals celebrating marijuana are held around the world on April 20, a counterculture holiday.

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Photos:History of marijuana in America

Sean Azzariti, an Iraq war veteran and marijuana activist, becomes the first person to legally purchase recreational marijuana in Colorado on January 1, 2014. Colorado was the first state in the nation to allow retail pot shops. "It's huge," Azzariti said. "It hasn't even sunk in how big this is yet."

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Photos:History of marijuana in America

In April 2014, Maryland became the 18th state to decriminalize marijuana possession. Research published by the Pew Research Center in February showed 54% of Americans support legalization of marijuana.

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Photos:History of marijuana in America

Matt Figi's 7-year-old daughter, Charlotte, was once severely ill. But a special strain of medical marijuana known as Charlotte's Web, which was named after the girl early in her treatment, has significantly reduced her seizures. In July 2014, Rep. Scott Perry, R-Pennsylvania, introduced a three-page bill that would amend the Controlled Substances Act -- the federal law that criminalizes marijuana -- to exempt plants like Charlotte's Web that have an extremely low percentage of THC, the chemical that makes users high.

Alaska Cannabis Club CEO Charlo Greene prepares to roll a joint at the medical marijuana dispensary in Anchorage on February 20, 2015. Several days later, Alaska became the third state in the nation to allow recreational marijuana.

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Photos:History of marijuana in America

A woman smokes pot at her home in Washington on February 26, 2015, the first day it was legal to possess marijuana for recreational purposes in the nation's capital. Democratic Mayor Muriel Bowser defied threats from Congress by implementing a voter-approved initiative, making the city the only place east of the Mississippi River where people can legally grow and share marijuana in private.

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Photos:History of marijuana in America

Employees make last-minute preparations before the grand opening of the Cannabis Corner in North Bonneville, Washington, on March 7, 2015. The pot shop is the first city-owned recreational marijuana store in the country.

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Photos:History of marijuana in America

Georgia Rep. Allen Peake celebrates with Kristi Baggarly, holding her daughter Kimber, after the state Senate approved Peake's medical marijuana bill March 24, 2015 in Atlanta. The bill will legalize possession of cannabis oil for treatment of certain medical conditions, such as the seizures suffered by Baggarly's daughter Kendle.

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Photos:History of marijuana in America

An employee at Kaya Shack, a Portland, Oregon, medical marijuana dispensary, showcases three types of marijuana sold at the shop on June 26, 2015. Oregon legalized recreational marijuana use on July 1, 2015.

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Risky business

The Andrews thrive on derring-do. About 30 years ago, they bought a building in the once-forsaken Lower Downtown. Donald Andrews remembers how a newspaper cast it as folly then for paying the highest price-per-foot in "LoDo" (pronounced "low-dough").

But the gamble paid off big -- LoDo now shines as a historic district -- and this week, the Andrews were sensing good fortune again.

Their LoDo Wellness Center in the building's basement overflowed with customers this week, with a steady line of as many as 100 people waiting for hours.

Andrews, 62, calls himself the "Wal-Mart greeter" at the seven-employee store. Irrepressibly charismatic, he's the energetic jokester -- entertaining clientele, keeping them in line, assigning numbers, and urging them to keep the staircase clear.

"I never waited this long for herb either, and I used to go to the deal that never went down!" he shouts to customers, making a reference to a Cheech & Chong bit that many of the young adults in line don't get.

Linda Andrews, owner of the pot shop and wife of Donald, is working downstairs as the attendant to the shop's inner sanctum -- a dispensing room where jars of buds perfume the air with skunky pungency. It's enough to make your nose run. She allows no more than a handful of customers to enter at one time.

The Andrews' daughter Haley, 28, is a "budtender" -- the person at the end of the line who uses tongs to lift the buds from glass jars to plastic vials.

In the background, Linda Andrews' cell phone won't stop ringing, and she wonders if their inventory will last until closing. She and her husband, who've been together 40 years, twice cut the limit a customer could buy -- from a maximum of an ounce for Colorado residents to a quarter ounce and then finally an eighth of an ounce, all within the first 3½ hours. An eighth is enough to roll three or four standard joints. (Out-of-state buyers are limited to a quarter of an ounce.)

"This may be 10 times what I expected," Linda Andrews says on opening day. "It looks like it's going to be lucrative, but it looks like we're going to have to produce more."

Her husband agrees. In addition to selling marijuana, the family business is also licensed to grow it. When Donald Andrews shows how a handful of growing rooms are one-third empty in a basement backroom, he predicts a new future:

"We're anticipating how to grow more marijuana efficiently, and we're going to expand into more space, but I got to tell you: I think the demand is going to be substantial. It blows me away."

Those words aren't spoken by a novice in the government-regulated marijuana business. The Andrews have been running a medical marijuana dispensary in the 6,250-square-foot basement ever since the state approved cannabis for medicinal uses in 2000.

"It's been four years, 200 grand, and a lot of sweat," Donald Andrews says, referring to how the family spent $200,000 to start the medicinal pot shop. "The regulations are detailed and time-consuming."

Now the Andrews are pioneering in America's green fever, among the first 35 or so pot shops in the nation -- all in Colorado -- to sell recreational pot.

Within just the first few hours of opening, the LoDo Wellness Center hits record sales for a single day -- $10,000 --- and the day was far from over.

At closing, business equals an entire month's sales of medical marijuana, but Linda Andrews kept the exact figure secret. She did say, however, they served almost 1,000 customers, the vast majority of them buying an eighth of an ounce priced between $40 and $60.

"This is a viable business as opposed to a cause," she said. The family's medical marijuana dispensary was largely a break-even venture done out of altruism, they say. The Andrews will continue selling medicinal cannabis, in a separate room as required by law, but the business' future lies in the recreational stuff.

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Indeed, "adult use" pot is projected to be a $208 million industry in Colorado this year -- on top of the $250 million projected to be spent on medical marijuana, said Betty Aldworth, deputy director of the National Cannabis Industry Association.

Nationwide, government-regulated marijuana is projected to double this year, to $2.3 billion from about $1 billion last year. That 2013 figure came solely from medical marijuana sales in more than a dozen states.

Several states are creating the growth. Colorado and Washington are the first two states with legalized recreational marijuana, and Illinois, Massachusetts, Nevada and Oregon will allow medical cannabis shops to open in 2014. Washington's recreational weed will go on sale later this year.

Pot promises to be such big business that advocates are planning voter initiatives for legalizing recreational use in several other states by 2016.

"This is unquestionably a tremendous growth industry," Aldworth said. "There hasn't been an opportunity like this in American history in quite some time. The tech boom had an impact on the American economy, but I think this could rival it. We're not creating a market out of nothing. We are just shifting it from the underground market."

Several other dispensaries also reported door-buster experiences this week, and now pot shop owners, who must grow most of their marijuana, want to increase their number of plants by several-fold.

For example, Medicine Man dispensary in Denver, the largest in the state, served 650 customers on the first day, tripling its biggest sale day for medicinal marijuana, and now the shop wants to triple its plants to 15,000, the owner said.

Evergreen Apothecary in Denver served 400 customers on opening day and now plans to increase its plants from 2,000 to as many as 24,000.

The Andrews too may seek government approval for more plants. They're a small business -- "a boutique," the matriarch calls it -- with only 192 plants, and they don't have an expansion figure yet. All plants are grown indoors, and state law limits to six the number of plants grown under each light fixture, putting the business's number of lamps at 32.

In all, about $1 million in business was done at about 35 pot shops on the first day of marijuana's legalization in Colorado, Aldworth estimated. She doesn't expect that pace to continue past the historic first week, when travelers from all the country and even Canada and Australia visited the first legal U.S. pot shops.

Such commerce translates into a bonanza for state tax collectors, who are expected to receive up to $67 million a year initially.

The taxes on recreational pot are considerable: a state excise, or wholesale, tax of 15%, a special state sales tax of 10%, a special Denver sales tax of 3.5% -- plus the usual state and city taxes of more than 7%, said spokesman Mason Tvert of the Marijuana Policy Project.

With so much cash flowing at dispensaries, advocates hope the U.S. Treasury and Justice Departments will work out an arrangement with banks to allow accounts with the marijuana merchants, freed from potential federal prosecution.

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Of the three family members hustling at the LoDo Wellness Center, it's hard to tell who's working the hardest.

For all he does, Donald Andrews says he doesn't get paid; in fact, he builds luxury homes.

Daughter Haley, 28, is endlessly patient, advising customers on strains of cannabis. She's been on her feet all day behind a counter of jars, and once she dispenses the buds, she walks the black plastic vial to a cashier, who collects the money and bags the herb.

When two officers from the Colorado Marijuana Enforcement Division arrive and flash their badges, it's the gregarious Donald Andrews who does most of the talking.

The three go to a corner of the dispensing room, and Andrews is working the heat as if he's dealing with building inspectors. He's charming and effusive. They ask how the day is going, and he summarizes just how busy they've been. Then they leave the room.

Asked later about the surprise inspection, Andrews says the officers provided observations "of what you're doing right and what you're doing wrong."

"They've never seen retail sales. They came in as a courtesy," he explains.

Then, he adds, "I've worked guys like that before."

If anyone may be out of place in the wall-to-wall pandemonium for legalized pot, it would be Linda Andrews.

Soft-spoken and measured in her words, she's a Colorado native who's never smoked pot and in fact prefers champagne or Prosecco, she says. She's been a full-time mother to two daughters for most of her life, though she holds a psychology degree and once worked in cancer research. She entered the medical pot business partly because the family couldn't find a tenant for the basement of their two-story building, built in 1888.